ALEC Insurance Pool Act

8/6/2019 ALEC Insurance Pool Act

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INSURANCEPOOLACT

{Title, enacting clause, etc.}

Section 1. This Act may be cited as the Comprehensive Health Insurance Pool Act.

Section 2. For the purposes of this Act the following definitions apply:

(A) l Agent means any person who is licensed to sell health insurance in this state.

(B) * Board- means the Board of Directors of the State Comprehensive Health Insurance Pool.

(C) - Health insurance- means any hospital or medical expense ncurred policy or nonprofit healthcare services plan contract, w-hether sold as an individual or group policy. The term does not includeany policy covering short-term accident only, a fixed-indemnity policy, a limited benefit policy,medical payment or personal injury coverage in a motor vehicle policy, coverage issued as asupplement to liability insurance, a disability policy, or workers- compensation.

(D) * Insurer- means any individual, corporation, association, partnership, fraternal benefit society,or any other entity engaged in the health insurance business, except insurance agents and brokers.This term shall also include medical services plans, hospital plans health maintenance organizationsand self-insurance arrangements, which shall be designated as engaged in the business or insurancefor the purposes of this Act.

(E) * Medicare- means coverage under both Parts A and B of Title XVLU of the Social SecurityAct (Public Law 74.271,42 U.S.C., Section 1395, et seq., as amended).

(F) * Pool- means the State Comprehensive Health Insurance Pool.

(G) * Physician- means a physician, osteopath, podiatrist, or, for purposes of oral surgery only, adental surgeon, each duly licensed by this state.


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(H) * Plan- means the Comprehensive Health Insurance Plan as adopted by the Board of Directorsof the State Comprehensive Health Insurance Pool, or by rule.(IJ l Eligible individuol- meam u person (i) with an uggrrgnte of18 months or morecreditclhle coverage with no lapses in coverage of more than 62 days;(iiJwhose most recentcoverqe wns under a group health plnn, governmental plm, or church plan; (iii) who is noteligible for continued coverage under a group health plnn, Medicare, or Medicaid, nnd does nothnve any other health irmunnce coverage; (iv) who has exhausted COBRA benefits or that of nsimilar state progum; and (v) who was not terminatedfrorn the most recent prior coverage dueto nonpcrytnent orfraud.Section 3. (A) Every insurer shall participate in the pool

(B) Health insurance policies available in accordance with this Act shall be available for sale oneyear from the date of enactment of this Act.

Section 4. (A) Except as provided in Subsection (B) of this Section, any resident of this state shallbe eligible for coverage under the plan, including:

(1) the insured- s spouse;

(2) any dependent unmarried child of the insured, from the moment of birth. Suchcoverage shall terminate at the end of the premium period in which the chrld marries,ceases o be a dependent of the insured, or attains the age of 19, whichever occursfirst, However, if the dependent is a full-time student at an accredited institution ofhigher learning, the coverage may continue while the child remains unmarried anda full-time student, but not beyond the premium period in which the child reaches theage of 23.

(B)( 1) No person who is currently receiving health care benefits under any federal or stateprogram providing financial assistance and/or preventive and rehabilitative social servicesis eligible under the plan.

(2) No person who is covered under the plan and who terminates coverage is againeligible for coverage unless 12 months has elapsed since the coverage wasterminated.


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(3) No person on whose behalf the plan has paid out $500,000 or more in coveredbenefits is eligible for coverage under the plan.

(4) The coverage of any person who ceases to meet the eligibility requirements ofthis Section may be terminated at the end of the policy period.

(5) No person is eligible for coverage under the plan unless such person has beenrejected by at least two insurers for coverage substantially similar to the plancoverage without material underwritin, 0 restriction at a rate equal to or less than thepool plan rate, and no person is eligible for coverage who has on the date of issue ofcoverage under the plan, equivalent coverage under another contract or policy.

(6) No inmate incarcerated in any state penal institution or confined to any narcoticdetention, treatment, and rehabilitation facility shall be eligible for coverage underthe plan, with the exception of eligible indiviudals.

Section 5, (A) There is hereby created a nonprofit legal entity to be known as the * StateComprehensive Health Insurance Pool: All insurers, as a condition of doing business inthis state, shall be members of the pool.

(B)(I) The pool shall operate under the supervision and approval of a seven member Boardof Directors appointed by the Commissioner of Insurance, and shall consist of:(a) two representatives of domestic insurance companies licensed to dobusiness in this state;(b) one representative of a nonprofit health care service plan

(c) one representative of a health maintenance organization;(d) one member from a health-related profession;

This cap may need fo he raised to reflect the lifetime cap on beyfils upplicnblr under a rwical plart.fi~r~comprehouive covcmge in the imlividunl mwkel.


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(e) one member from the general public, who is not associated with themedical profession, a hospital, or an insurer, and

(fj one member to represent a group considered to be - uninsurable:

(2) In making appointments to the Board of Directors, the Commissioner shall striveto ensure that at least one person serving on the Board of Directors is at least 60years of age:

(3) The original Board of Directors shall be appointed for the following terms:

(a) three members for a term of one year;(b) two members for a term of two years; and

(c) two members for a term of three years

(4) All terms after the initial term shall be for three years.

(5) The Board of Directors shall elect one of its members as Chairman.

(6) Members of the Board of Directors may be reimbursed from monies of the poolfor actual and necessary expenses incurred by them in the performance of theirofficial duties as members of the Board of Directors, but shall not otherwise becompensated for their services.

(7) The Board shall adopt a plan pursuant to this Act and submit its articles, bylaws,and operating rules to the State Commissioner of Insurance for approval. If the Boardfails to adopt:such a plan and suitable articles, bylaws, and operating rules within 180days after the appointment of the Board, the State Commissioner of Insurance shallpromulgate rules to effectuate the provisions of this Act; and such rules shall remainin effect until superseded by a plan and articles, bylaws, and operating proceduressubmitted by the Board and approved by the State Commissioner of Insurance.


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Section 6. The Boqd shall:

(A) establish administrative and accounting procedures for the operation of the pool;

(B) establish procedures under which applicants and participants in the plan may havegrievances reviewed by an impartial body and reported to the Board:

(C) select an administering insurer in accordance with Section 8 of this Act;

(D)(l) collect assessments rom all insurers to provide for claims paid under the plan andfor administrative expenses ncurred or estimated to be incurred during the period for whichassessment s made.

(2) the level of assessments,

(3) the insurer at the end of each calendar year. However, in addition to suchassessments, the Board shall collect an organizational assessment or assessmentsfrom all insurers as necessary to provide for expenses that have been incurred or areestimated to be incurred prior to the receipt of the first calendar year assessments.Organizational assessmentsshall be equal for all insurers, but shall not exceed $100per insurer for all such assessments.Assessments shall be due and payable within 30days of receipt of the assessment notice by the insurer.

(E) require that all policy forms issued by the Board conform to standard forms developedby the Board. The forms shall be approved by the State Commissioner of Insurance.

(F) develop a program to publicize the existence of the plan, the eligibility requirements ofthe plan, and the procedures for enrollment in the plan, and to maintain public awareness ofthe plan.(G) provide eligible individuals with a - choice of health insurance coverc~ye* pursunntto P.L. 104-191, Section 2744 (a)(I)(A).


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Section 7. The Board shall:

(A) exercise powers granted to insurers under the laws of this state;

(B) sue or be sued;

(C) in addition to imposing assessments under Section 6 of this Act, levy interimassessments against insurers to insure the financial ability of the plan to cover claimsexpenses and administrative expenses incurred or estimated to be incurred in the operationof the plan prior to the end of the calendar year. Any interim assessment shall be due andpayable within 30 days of the receipt of the assessment notice by the insurer. Interimassessmentsshall be credited against the insurer- s annual assessment.

Section 8. (A) The Board shall select an insurer, through a competitive bidding process, toadminister the plan, The Board shall evaluate the bids submitted under this Subsection basedon criteria established by the Board, which criteria shall include, but not be limited to, thefollowing: .

(1) the insurer- s proven ability to handle large group accident and health policiesinsurance;

(2) the efficiency of the insurers claims-paying procedures;

(3) an estimate of total charges for administering the plan.(B) A non-insurer third prt~ administrator may be allowed if the Board deemsnecessny

(C)@j The administering insurer shall serve for a period of three years. At least one yearprior to the expiration of each three year period of service by an administering insurer, theBoard shall invite all insuren, including the current administering insurer, to submit bids toserve as the administering insurer for the succeeding three-year period. The selection of theadministering insure? for the succeeding three-year period shall be made at least six monthsprior to the end of tile current three-year period.


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(D)(C) The administering insurer shall:

(1) perform,all eligibility and administrative claims-payment functions relating tothe plan;

(2) pay an agent. s referral fee as established by the Board to each agent who refersan applicant to the plan, if the applicant is accepted. The selling or marketing ofplans shall not be limited to the administrating insurer or its agents. The referral feesshall be paidby the administrating insurer from moneys received as premiums for theph;

(3) establish a premium billing procedure for collection of premiums from personsinsured under the plan;

(4) perform all necessary functions to assure timely payment of benefits to coveredpersons under the plan, including, but not limited to, the following:(a) making available information relating to the proper manner of submittinga claim for benefits under the plan and distributing forms upon whichsubmissions shall be made;(b) evaluating the eligibility of each claim for payment under the plan;(c) notifying each claimant within thirty (30) days after receiving a properlycompleted and executed proof of loss, whether the claim is accepted, rejected,or compromised.

(5) submit regular reports to the Board regarding the operation of the plan. Thefrequency, content, and form of the reports shall be determined by the Board.

(6) following the close of each calendar year, determine net premiums, re-insurancepremiums less administrative expenses allowance, the expense of administrationpertaining to there-insurance operations of the pool, and the incurred losses for theyear, and report this information to the Board and to the Commissioner of Insurance.


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(7)(a) Pay claims expenses rom the premium payments received from, or on behalfof, covered persons under the plan.(b) If the payments by the administrating insurer for claims expensesexceedsthe portion of premiums allocated by the Board for the payment of claimsexpenses, the Board shall assess he additional funds necessary or paymentof claims expenses;

Section 9. (A) Each insurer shall be assessedby the Board a portion of the operating lossesof the plan; such portion being determined by multiplying such operating lossesby a fraction,the numerator of which equals the insurer* s premium and subscriber contract chargespertaining to the direct writing of health insurance written in this state during the precedingcalendar year and the denominator of which equal* s the total of all such premiums andsubscriber contract charges written by participating insurers in this state during the previouscalendar year, The computation of assessmentsshall be made with a reasonable degree ofaccuracy, with the recognition that exact determinations may not always be possible.

(B)(l) If assessments and other receipts by the pool exceed the actual losses andadministrative expenses of the plan, the excess shall be held at interest and used by the Boardto offset future losses or to reduce premiums.

(2) As used in this Subsection, the term l future losses- includes reserves for claimsincurred but not reported.

(C)( 1) Each insurer- s proportion of participation in the plan shall be determined annuallyby the Board based on annual statements and other reports deemed necessary by the Boardand filed with it by the insurer.

(2) Any deficit incurred under the plan shall be recouped by assessmentapportionedamong participating insurers by the Board in the manner set forth in Subsection (A)of this Section; arid the insurers may recover the net loss, if any, after the tax offsetprovided in Section 10 of this Act in the normal course of their respective businesseswithout time limitation.(D) Assessment.~ IXI; he made in respect to ERGA plan reinsurers


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Section 10. (A) Any assessment may be offset, in an amount equal to the amount of theassessment paid to the pool, against the state corporate income tax or the premium taxpayable by that participating insurer for the year in which the assessment s levied or the fouryears subsequent to that year.

(B)( 1) The Board may abate or defer, in whole or in part, the assessmentof a participatinginsurer if, in the opinion of the Board, payment of the assessmentwould endanger the abilityof the insurer to fulfill its contractual obligations.

(2) In the event that an assessment against a participating insurer is abated ordeferred, in whole or in Parr, the amount by which such assessment s abated ordeferred may be assessed against the other participating insurers in a mannerconsistent with the basis for assessmentsset forth in Subsection (A) of Section 9 ofthis Act, and the insurer receiving the abatement or deferment shall remain liable tothe pool for the deficiency for four years.

(C) Notwithstanding any provisions of this Act to the contrary, no participating insurer maybe assessed n any one calendar year an amount greater than the amount which that insurerpaid to the state in the previous year as premium tax and corporate income tax on thebusiness to which this tax applies, or one-hundredth of one percent (O.OOlpercent)* of thetotal written premiums on such business in this state, whichever is greater.

Section 11. The coverage provided by the plan shall be directly insured by the pool, and thepolicies administered through the administering insurer.

Section 12. (A)(l) The plan shall offer in an annually renewable policy the coveragespecified in this Section for each eligible person, except that if an eligible person is alsoeligible for Medicare coverage, the plan shall not pay or reimburse any person for expensespaid by Medicare.

2Becnme ofthe 200.perce,lt-of-vrandnrd cq~ on premium for eligible individuals and because the poolmuff guormttee coverage RJkligiblr individuuls, pursr~~nt fo the NAIC Model Health Plan fur Utdrr~~~c~bkI,rdivid&s Act, ns defined in Secrion 12 (F) offhis Act, the limits on carrier liability shall erther be removed or (1backup funding rnrchnrrism .kdl be creuted in case the pool experirncrs losses abovt! what call be unded urlder theCU~WTI h~,~c. Section 7 ofthp NAIC model contains severcri nirerr~arivesfor addirionalfi~ndi~~g of a risk poolprogwn, one or more of which could be employed.


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(2) Any person whose health insurance is involuntarily terminated for any reasonother than nonpayment of premium may apply for coverage under the plan. It suchcoverage is applied for within 60 days after the involuntary termination and ifpremiums are paid for the entire period of coverage, the effective date of the coverageshall be the date of the termination of the previous coverage.

(3) The plan shall provide that, upon the death or divorce of the individual in whosename the contract was issued, every other person covered in the contract may electwithin 60 days to continue under the same or different contract.

(4) No coverage provided to a person who is eligible for Medicaid benefits shall beissued as a Medicaid supplement po licy.

(B)( 1) The plan shall offer major medical expense coverage to every eligible person who isnot eligible for Medicare. Major medical expense coverage offered under the plan shall payan eligible person- s covered expenses, subject to the limits on the deductible andcoinsurance payments authorized under Subsection (E) of this Section up to a lifetime limitof $500,000 per covered individual. The maximum limit under this paragraph shall not bealtered by the Board, and no actuarially equivalent benefit may be substituted by the Board.

(2) The plan shall provide that any policy issued to a person eligible for Medicareshall be separately rated to reflect differences in experiences reasonably expected tooccur as a result of Medicare payments.CC) The plan shall offerfederally eligible individuuls at least one policyform ofcoverage that is c&parable to comprehensive health insumace coverage offered in theindividual market or that is comparable to cmy standard option of coverage availableunder the group or individual health insurance laws of this State; provided, however, thatsuch policy.form of coverage must be consistent with major medical expense coverage.(D)(C)(l) The usual customary charges for the following services and articles, whenprescribed by a physician, shall be covered expenses:

(a) hospital services;

(b) professional services for the diagnosis or treatment of injuries, illness, or


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conditions, other than dental, which are rendered by a physician or by othersat his direction;(c) drugs requiring a physician- s prescription;(d) services of a licensed skilled nursing facility for eligible individuals,ineligible for medicare, for not more than one hundred eighty (180) calendardays during a policy year, if the services are the type which would qualify asreimbursable services under Medicare;

(e) services of a home health agency, of which the services are of a typewhich would qualify reimbursable services under Medicare;

(f) use of radium or other radioactive materials;

(9) oxygen;(h) anesthetics;(i) prosthesis, other than dental prosthesis;

(j) rental or purchase, as appropriate, of durable medical equipment, otherthan eyeglasses and hearing aids;(k) diagnostic x-rays and laboratory tests;

(1) oral surgery for partially or completely erupted, impacted teeth and oralsurgery with respect to the tissues of the mouth when not performed inconnection with the extraction or repair of teeth;(m) services of a physical therapist;(n) tmnsportation provided by a licensed ambulance service to the nearestfacility qualified to treat the condition;

(0) processing of blood, includin,,0 but not limited to, collecting, testing,fractioning, and distributing blood; and


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(p) services for the treatment of alcohol and drug abuse, but the insured shallbe required to make a 50 percent co-payment and the payment of the planshall not exceed $4,000.

(2) as an option, the plan shall make available, at an additional premium, coveragefor services provided by a duly licensed chiropractor.

(E)@) Covered expenses shall not include the following:

(I) any charge for treatment for cosmetic purposes, other than for repair or treatmentof any injury: or congenital bodily defect to restore normal bodily functions;

(2) any charge for care which is primarily for custodial or domiciliary purposeswhich do not qualify as eligible services under Medicaid;

(3) any charge for confinement in a private room to the extent that such charge is inexcess of the charge by the institution for its most common semiprivate room, unlessa private room is prescribed as medically necessary by a physician;

(4) that part of any charge for services or articles rendered or provided by a physicalor other health care personnel which exceeds the prevailing charge in the localitywhere the service is provided, or any charge for services or articles not medicallynecessary;

(5) any charge for services or articles the provision of which is not within theauthorized scope of practice of the institution or individual providing the services 01articles;

(6) any expense incurred prior to the effective date of the coverage under the planfor the person on whose behalf the expense was incurred;

(7) any charge for routing physical examinations;


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(8) any charge for the services of blood donors and any fee for the failure to replacethe first three pints of blood provided to an eligible person annually; or

(9) any charge for personal services or supplies provided by a hospital or nursinghome, or any other nonmedical or nonprescribed services or supplies.(F)j (1)The plan shall establish premium rates for plan coveruge. Separate schedules ofpremium rates based on age, se.r and geographical location may apply for individualrisks. Premium rates and schedules shall he submitted to the Insurance Commissioner ofthe State or approval prior to use.

(2) The plan, with the assistance ofthe Commissioner, shall determine LI standard risk rate by considering the premium ratescharged by other insurers fleering health insurance coverage to individuals. Thestandard risk rate shall be established using reasonable actuarial techniques, and shallrejlect anticipated experience and expenses or such coverage. initial rates for plancoverage shall not be less than 125-150percent of rates established as appilicable forindividual standard risks. Subject to the limits provided in this paragraph, subsequentrates shall he established to provide fully for the expected costs of claims includingrecovery ofprior losses,expenses of operation, investment income of claim reserves, andarty other cost factors subject to the limitations descrived herein. In no event shall planrates e.xceed200 percent of rates applicable to individual standard risks.

(C)(Q(l) The plan shall provide for a choice of annual deductibles for major medicalexpenses in the amount of $1,000, $1,500, $2,000, $5,000, and $7,500, plus the benefitspayable under any other type of insurance coverage or workers* compensation, provided thatif two individual members of a family satisfy the applicable deductible, no other membersof the family shall be required to meet deductibles for the remainder of that calendar year.

(2) the schedule of premiums and deductibles shall be established by the Board.

(3) rates for coverage issued by the pool may not be unreasonable in relation to thebenefits provided, the risk experience, and the reasonable expenses of providingcoverage.

jThi.7 subsection r$7rcrs Ianguage in the NAIC Model Health P/m for Uninsurcrbie Indii,iduais Act. P.L.104-191 specijiicnily ,mte~ that premiwn rares charged 10 eligible individzrals musi be Aconsismf with simdard.ritzciirded irt the NAIC Model Health Plnr~.fw Urriruorablr lndividmls Aria


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(4) Separate schedules of premium rates based on age may apply for individual risks

(5) Rates are subject to approval by the Commissioner of Lnsurance.

Section 13. {Severability clause.}

Section 14. (Repealer clause.)

Section 15. {Effective date.}


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INSURANCEPOOLACT

{Title, enacting clause, etc.}

Section 1. This Act may be cited as the Comprehensive Health Insurance Pool Act.

Section 2. For the purposes of this Act the following definitions apply:

(A) l Agent means any person who is licensed to sell health insurance in this state.

(B) * Board- means the Board of Directors of the State Comprehensive Health Insurance Pool.

(C) - Health insurance- means any hospital or medical expense ncurred policy or nonprofit healthcare services plan contract, w-hether sold as an individual or group policy. The term does not includeany policy covering short-term accident only, a fixed-indemnity policy, a limited benefit policy,medical payment or personal injury coverage in a motor vehicle policy, coverage issued as asupplement to liability insurance, a disability policy, or workers- compensation.

(D) * Insurer- means any individual, corporation, association, partnership, fraternal benefit society,or any other entity engaged in the health insurance business, except insurance agents and brokers.This term shall also include medical services plans, hospital plans health maintenance organizationsand self-insurance arrangements, which shall be designated as engaged in the business or insurancefor the purposes of this Act.

(E) * Medicare- means coverage under both Parts A and B of Title XVLU of the Social SecurityAct (Public Law 74.271,42 U.S.C., Section 1395, et seq., as amended).

(F) * Pool- means the State Comprehensive Health Insurance Pool.

(G) * Physician- means a physician, osteopath, podiatrist, or, for purposes of oral surgery only, adental surgeon, each duly licensed by this state.


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(H) * Plan- means the Comprehensive Health Insurance Plan as adopted by the Board of Directorsof the State Comprehensive Health Insurance Pool, or by rule.(IJ l Eligible individuol- meam u person (i) with an uggrrgnte of18 months or morecreditclhle coverage with no lapses in coverage of more than 62 days;(iiJwhose most recentcoverqe wns under a group health plnn, governmental plm, or church plan; (iii) who is noteligible for continued coverage under a group health plnn, Medicare, or Medicaid, nnd does nothnve any other health irmunnce coverage; (iv) who has exhausted COBRA benefits or that of nsimilar state progum; and (v) who was not terminatedfrorn the most recent prior coverage dueto nonpcrytnent orfraud.Section 3. (A) Every insurer shall participate in the pool

(B) Health insurance policies available in accordance with this Act shall be available for sale oneyear from the date of enactment of this Act.

Section 4. (A) Except as provided in Subsection (B) of this Section, any resident of this state shallbe eligible for coverage under the plan, including:

(1) the insured- s spouse;

(2) any dependent unmarried child of the insured, from the moment of birth. Suchcoverage shall terminate at the end of the premium period in which the chrld marries,ceases o be a dependent of the insured, or attains the age of 19, whichever occursfirst, However, if the dependent is a full-time student at an accredited institution ofhigher learning, the coverage may continue while the child remains unmarried anda full-time student, but not beyond the premium period in which the child reaches theage of 23.

(B)( 1) No person who is currently receiving health care benefits under any federal or stateprogram providing financial assistance and/or preventive and rehabilitative social servicesis eligible under the plan.

(2) No person who is covered under the plan and who terminates coverage is againeligible for coverage unless 12 months has elapsed since the coverage wasterminated.


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(3) No person on whose behalf the plan has paid out $500,000 or more in coveredbenefits is eligible for coverage under the plan.

(4) The coverage of any person who ceases to meet the eligibility requirements ofthis Section may be terminated at the end of the policy period.

(5) No person is eligible for coverage under the plan unless such person has beenrejected by at least two insurers for coverage substantially similar to the plancoverage without material underwritin, 0 restriction at a rate equal to or less than thepool plan rate, and no person is eligible for coverage who has on the date of issue ofcoverage under the plan, equivalent coverage under another contract or policy.

(6) No inmate incarcerated in any state penal institution or confined to any narcoticdetention, treatment, and rehabilitation facility shall be eligible for coverage underthe plan, with the exception of eligible indiviudals.

Section 5, (A) There is hereby created a nonprofit legal entity to be known as the * StateComprehensive Health Insurance Pool: All insurers, as a condition of doing business inthis state, shall be members of the pool.

(B)(I) The pool shall operate under the supervision and approval of a seven member Boardof Directors appointed by the Commissioner of Insurance, and shall consist of:(a) two representatives of domestic insurance companies licensed to dobusiness in this state;(b) one representative of a nonprofit health care service plan

(c) one representative of a health maintenance organization;(d) one member from a health-related profession;

This cap may need fo he raised to reflect the lifetime cap on beyfils upplicnblr under a rwical plart.fi~r~comprehouive covcmge in the imlividunl mwkel.


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(e) one member from the general public, who is not associated with themedical profession, a hospital, or an insurer, and

(fj one member to represent a group considered to be - uninsurable:

(2) In making appointments to the Board of Directors, the Commissioner shall striveto ensure that at least one person serving on the Board of Directors is at least 60years of age:

(3) The original Board of Directors shall be appointed for the following terms:

(a) three members for a term of one year;(b) two members for a term of two years; and

(c) two members for a term of three years

(4) All terms after the initial term shall be for three years.

(5) The Board of Directors shall elect one of its members as Chairman.

(6) Members of the Board of Directors may be reimbursed from monies of the poolfor actual and necessary expenses incurred by them in the performance of theirofficial duties as members of the Board of Directors, but shall not otherwise becompensated for their services.

(7) The Board shall adopt a plan pursuant to this Act and submit its articles, bylaws,and operating rules to the State Commissioner of Insurance for approval. If the Boardfails to adopt:such a plan and suitable articles, bylaws, and operating rules within 180days after the appointment of the Board, the State Commissioner of Insurance shallpromulgate rules to effectuate the provisions of this Act; and such rules shall remainin effect until superseded by a plan and articles, bylaws, and operating proceduressubmitted by the Board and approved by the State Commissioner of Insurance.


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Section 6. The Boqd shall:

(A) establish administrative and accounting procedures for the operation of the pool;

(B) establish procedures under which applicants and participants in the plan may havegrievances reviewed by an impartial body and reported to the Board:

(C) select an administering insurer in accordance with Section 8 of this Act;

(D)(l) collect assessments rom all insurers to provide for claims paid under the plan andfor administrative expenses ncurred or estimated to be incurred during the period for whichassessment s made.

(2) the level of assessments,

(3) the insurer at the end of each calendar year. However, in addition to suchassessments, the Board shall collect an organizational assessment or assessmentsfrom all insurers as necessary to provide for expenses that have been incurred or areestimated to be incurred prior to the receipt of the first calendar year assessments.Organizational assessmentsshall be equal for all insurers, but shall not exceed $100per insurer for all such assessments.Assessments shall be due and payable within 30days of receipt of the assessment notice by the insurer.

(E) require that all policy forms issued by the Board conform to standard forms developedby the Board. The forms shall be approved by the State Commissioner of Insurance.

(F) develop a program to publicize the existence of the plan, the eligibility requirements ofthe plan, and the procedures for enrollment in the plan, and to maintain public awareness ofthe plan.(G) provide eligible individuals with a - choice of health insurance coverc~ye* pursunntto P.L. 104-191, Section 2744 (a)(I)(A).


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Section 7. The Board shall:

(A) exercise powers granted to insurers under the laws of this state;

(B) sue or be sued;

(C) in addition to imposing assessments under Section 6 of this Act, levy interimassessments against insurers to insure the financial ability of the plan to cover claimsexpenses and administrative expenses incurred or estimated to be incurred in the operationof the plan prior to the end of the calendar year. Any interim assessment shall be due andpayable within 30 days of the receipt of the assessment notice by the insurer. Interimassessmentsshall be credited against the insurer- s annual assessment.

Section 8. (A) The Board shall select an insurer, through a competitive bidding process, toadminister the plan, The Board shall evaluate the bids submitted under this Subsection basedon criteria established by the Board, which criteria shall include, but not be limited to, thefollowing: .

(1) the insurer- s proven ability to handle large group accident and health policiesinsurance;

(2) the efficiency of the insurers claims-paying procedures;

(3) an estimate of total charges for administering the plan.(B) A non-insurer third pry administrator may be allowed if the Board deemsnecessny

(C)@j The administering insurer shall serve for a period of three years. At least one yearprior to the expiration of each three year period of service by an administering insurer, theBoard shall invite all insuren, including the current administering insurer, to submit bids toserve as the administering insurer for the succeeding three-year period. The selection of theadministering insure? for the succeeding three-year period shall be made at least six monthsprior to the end of tile current three-year period.


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(D)(C) The administering insurer shall:

(1) perform,all eligibility and administrative claims-payment functions relating tothe plan;

(2) pay an agent. s referral fee as established by the Board to each agent who refersan applicant to the plan, if the applicant is accepted. The selling or marketing ofplans shall not be limited to the administrating insurer or its agents. The referral feesshall be paidby the administrating insurer from moneys received as premiums for theph;

(3) establish a premium billing procedure for collection of premiums from personsinsured under the plan;

(4) perform all necessary functions to assure timely payment of benefits to coveredpersons under the plan, including, but not limited to, the following:(a) making available information relating to the proper manner of submittinga claim for benefits under the plan and distributing forms upon whichsubmissions shall be made;(b) evaluating the eligibility of each claim for payment under the plan;(c) notifying each claimant within thirty (30) days after receiving a properlycompleted and executed proof of loss, whether the claim is accepted, rejected,or compromised.

(5) submit regular reports to the Board regarding the operation of the plan. Thefrequency, content, and form of the reports shall be determined by the Board.

(6) following the close of each calendar year, determine net premiums, re-insurancepremiums less administrative expenses allowance, the expense of administrationpertaining to there-insurance operations of the pool, and the incurred losses for theyear, and report this information to the Board and to the Commissioner of Insurance.


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(7)(a) Pay claims expenses rom the premium payments received from, or on behalfof, covered persons under the plan.(b) If the payments by the administrating insurer for claims expensesexceedsthe portion of premiums allocated by the Board for the payment of claimsexpenses, the Board shall assess he additional funds necessary or paymentof claims expenses;

Section 9. (A) Each insurer shall be assessedby the Board a portion of the operating lossesof the plan; such portion being determined by multiplying such operating lossesby a fraction,the numerator of which equals the insurer* s premium and subscriber contract chargespertaining to the direct writing of health insurance written in this state during the precedingcalendar year and the denominator of which equal* s the total of all such premiums andsubscriber contract charges written by participating insurers in this state during the previouscalendar year, The computation of assessmentsshall be made with a reasonable degree ofaccuracy, with the recognition that exact determinations may not always be possible.

(B)(l) If assessments and other receipts by the pool exceed the actual losses andadministrative expenses of the plan, the excess shall be held at interest and used by the Boardto offset future losses or to reduce premiums.

(2) As used in this Subsection, the term l future losses- includes reserves for claimsincurred but not reported.

(C)( 1) Each insurer- s proportion of participation in the plan shall be determined annuallyby the Board based on annual statements and other reports deemed necessary by the Boardand filed with it by the insurer.

(2) Any deficit incurred under the plan shall be recouped by assessmentapportionedamong participating insurers by the Board in the manner set forth in Subsection (A)of this Section; arid the insurers may recover the net loss, if any, after the tax offsetprovided in Section 10 of this Act in the normal course of their respective businesseswithout time limitation.(D) Assessment.~ IXI; he made in respect to ERGA plan reinsurers


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Section 10. (A) Any assessment may be offset, in an amount equal to the amount of theassessment paid to the pool, against the state corporate income tax or the premium taxpayable by that participating insurer for the year in which the assessment s levied or the fouryears subsequent to that year.

(B)( 1) The Board may abate or defer, in whole or in part, the assessmentof a participatinginsurer if, in the opinion of the Board, payment of the assessmentwould endanger the abilityof the insurer to fulfill its contractual obligations.

(2) In the event that an assessment against a participating insurer is abated ordeferred, in whole or in Parr, the amount by which such assessment s abated ordeferred may be assessed against the other participating insurers in a mannerconsistent with the basis for assessmentsset forth in Subsection (A) of Section 9 ofthis Act, and the insurer receiving the abatement or deferment shall remain liable tothe pool for the deficiency for four years.

(C) Notwithstanding any provisions of this Act to the contrary, no participating insurer maybe assessed n any one calendar year an amount greater than the amount which that insurerpaid to the state in the previous year as premium tax and corporate income tax on thebusiness to which this tax applies, or one-hundredth of one percent (O.OOlpercent)* of thetotal written premiums on such business in this state, whichever is greater.

Section 11. The coverage provided by the plan shall be directly insured by the pool, and thepolicies administered through the administering insurer.

Section 12. (A)(l) The plan shall offer in an annually renewable policy the coveragespecified in this Section for each eligible person, except that if an eligible person is alsoeligible for Medicare coverage, the plan shall not pay or reimburse any person for expensespaid by Medicare.

2Becnme ofthe 200.perce,lt-of-vrandnrd cq~ on premium for eligible individuals and because the poolmuff guormttee coverage RJkligiblr individuuls, pursr~~nt fo the NAIC Model Health Plan fur Utdrr~~~c~bkI,rdivid&s Act, ns defined in Secrion 12 (F) offhis Act, the limits on carrier liability shall erther be removed or (1backup funding rnrchnrrism .kdl be creuted in case the pool experirncrs losses abovt! what call be unded urlder theCU~WTI h~,~c. Section 7 ofthp NAIC model contains severcri nirerr~arivesfor addirionalfi~ndi~~g of a risk poolprogwn, one or more of which could be employed.


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(2) Any person whose health insurance is involuntarily terminated for any reasonother than nonpayment of premium may apply for coverage under the plan. It suchcoverage is applied for within 60 days after the involuntary termination and ifpremiums are paid for the entire period of coverage, the effective date of the coverageshall be the date of the termination of the previous coverage.

(3) The plan shall provide that, upon the death or divorce of the individual in whosename the contract was issued, every other person covered in the contract may electwithin 60 days to continue under the same or different contract.

(4) No coverage provided to a person who is eligible for Medicaid benefits shall beissued as a Medicaid supplement po licy.

(B)( 1) The plan shall offer major medical expense coverage to every eligible person who isnot eligible for Medicare. Major medical expense coverage offered under the plan shall payan eligible person- s covered expenses, subject to the limits on the deductible andcoinsurance payments authorized under Subsection (E) of this Section up to a lifetime limitof $500,000 per covered individual. The maximum limit under this paragraph shall not bealtered by the Board, and no actuarially equivalent benefit may be substituted by the Board.

(2) The plan shall provide that any policy issued to a person eligible for Medicareshall be separately rated to reflect differences in experiences reasonably expected tooccur as a result of Medicare payments.CC) The plan shall offerfederally eligible individuuls at least one policyform ofcoverage that is c&parable to comprehensive health insumace coverage offered in theindividual market or that is comparable to cmy standard option of coverage availableunder the group or individual health insurance laws of this State; provided, however, thatsuch policy.form of coverage must be consistent with major medical expense coverage.(D)(C)(l) The usual customary charges for the following services and articles, whenprescribed by a physician, shall be covered expenses:

(a) hospital services;

(b) professional services for the diagnosis or treatment of injuries, illness, or


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conditions, other than dental, which are rendered by a physician or by othersat his direction;(c) drugs requiring a physician- s prescription;(d) services of a licensed skilled nursing facility for eligible individuals,ineligible for medicare, for not more than one hundred eighty (180) calendardays during a policy year, if the services are the type which would qualify asreimbursable services under Medicare;

(e) services of a home health agency, of which the services are of a typewhich would qualify reimbursable services under Medicare;

(f) use of radium or other radioactive materials;

(9) oxygen;(h) anesthetics;(i) prosthesis, other than dental prosthesis;

(j) rental or purchase, as appropriate, of durable medical equipment, otherthan eyeglasses and hearing aids;(k) diagnostic x-rays and laboratory tests;

(1) oral surgery for partially or completely erupted, impacted teeth and oralsurgery with respect to the tissues of the mouth when not performed inconnection with the extraction or repair of teeth;(m) services of a physical therapist;(n) tmnsportation provided by a licensed ambulance service to the nearestfacility qualified to treat the condition;

(0) processing of blood, includin,,0 but not limited to, collecting, testing,fractioning, and distributing blood; and


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(p) services for the treatment of alcohol and drug abuse, but the insured shallbe required to make a 50 percent co-payment and the payment of the planshall not exceed $4,000.

(2) as an option, the plan shall make available, at an additional premium, coveragefor services provided by a duly licensed chiropractor.

(E)@) Covered expenses shall not include the following:

(I) any charge for treatment for cosmetic purposes, other than for repair or treatmentof any injury: or congenital bodily defect to restore normal bodily functions;

(2) any charge for care which is primarily for custodial or domiciliary purposeswhich do not qualify as eligible services under Medicaid;

(3) any charge for confinement in a private room to the extent that such charge is inexcess of the charge by the institution for its most common semiprivate room, unlessa private room is prescribed as medically necessary by a physician;

(4) that part of any charge for services or articles rendered or provided by a physicalor other health care personnel which exceeds the prevailing charge in the localitywhere the service is provided, or any charge for services or articles not medicallynecessary;

(5) any charge for services or articles the provision of which is not within theauthorized scope of practice of the institution or individual providing the services 01articles;

(6) any expense incurred prior to the effective date of the coverage under the planfor the person on whose behalf the expense was incurred;

(7) any charge for routing physical examinations;


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(8) any charge for the services of blood donors and any fee for the failure to replacethe first three pints of blood provided to an eligible person annually; or

(9) any charge for personal services or supplies provided by a hospital or nursinghome, or any other nonmedical or nonprescribed services or supplies.(F)j (1)The plan shall establish premium rates for plan coveruge. Separate schedules ofpremium rates based on age, se.r and geographical location may apply for individualrisks. Premium rates and schedules shall he submitted to the Insurance Commissioner ofthe State or approval prior to use.

(2) The plan, with the assistance ofthe Commissioner, shall determine LI standard risk rate by considering the premium ratescharged by other insurers fleering health insurance coverage to individuals. Thestandard risk rate shall be established using reasonable actuarial techniques, and shallrejlect anticipated experience and expenses or such coverage. initial rates for plancoverage shall not be less than 125-150percent of rates established as appilicable forindividual standard risks. Subject to the limits provided in this paragraph, subsequentrates shall he established to provide fully for the expected costs of claims includingrecovery ofprior losses,expenses of operation, investment income of claim reserves, andarty other cost factors subject to the limitations descrived herein. In no event shall planrates e.xceed200 percent of rates applicable to individual standard risks.

(C)(Q(l) The plan shall provide for a choice of annual deductibles for major medicalexpenses in the amount of $1,000, $1,500, $2,000, $5,000, and $7,500, plus the benefitspayable under any other type of insurance coverage or workers* compensation, provided thatif two individual members of a family satisfy the applicable deductible, no other membersof the family shall be required to meet deductibles for the remainder of that calendar year.

(2) the schedule of premiums and deductibles shall be established by the Board.

(3) rates for coverage issued by the pool may not be unreasonable in relation to thebenefits provided, the risk experience, and the reasonable expenses of providingcoverage.

jThi.7 subsection r$7rcrs Ianguage in the NAIC Model Health P/m for Uninsurcrbie Indii,iduais Act. P.L.104-191 specijiicnily ,mte~ that premiwn rares charged 10 eligible individzrals musi be Aconsismf with simdard.ritzciirded irt the NAIC Model Health Plnr~.fw Urriruorablr lndividmls Aria


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(4) Separate schedules of premium rates based on age may apply for individual risks

(5) Rates are subject to approval by the Commissioner of Lnsurance.

Section 13. {Severability clause.}

Section 14. (Repealer clause.)

Section 15. {Effective date.}

ALEC Insurance Pool Act

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